Investor Equity for SBA Acquisitions

Two ways to work with the Fund

The Fund is built for acquisitions that are moving toward an LOI and need committed financing. Once you’re negotiating an LOI or under one and need the equity lined up for the lender, we want to see the deal.

Need an equity partner for your live deal?

Pitch the Fund with the full picture. We will look at the business, your operating fit, the financing, and the structure before deciding whether we belong in the deal.

Pitch the Fund

Still searching?

Committed Capital is the pre-deal path for experienced Searchers who want the equity lined up before they find the business.

Explore Committed Capital →

Buy bigger with Investor-Backed Search

Investor-Backed Search is the practice of using outside equity alongside your own capital and SBA financing to pursue a larger acquisition.

Rather than having your personal investment determine how large a business you can buy, outside equity expands your purchasing power. The tradeoff is that investors may also ask for more ownership or control.

The Lab’s Fund is built to give Searchers more buying power without giving up day-to-day control or the majority of the ownership.

Self-funded$300,000 of your own

$3M

With the Fund + SBAThe same $300,000

$6M

Your cashSBA financingFund equity + SBA

Same cash, larger business

A $300,000 personal investment might support a roughly $3 million self-funded purchase.

By adding that same $300,000 alongside investor equity from both the Fund and SBA financing, the same cash can support a business closer to $6 million.

Why the math works

Our Fund is designed around SBA-backed acquisitions because the leverage keeps the equity portion relatively small.

That allows us to put meaningful capital behind the deal while you keep the majority of the common ownership and run the company.

Keep more cash in reserve

Depending on the cost of the business you want to buy, our Fund may also reduce how much of your own cash has to go into the deal.

That leaves more in reserve for the transition, a slow month, or the inevitable surprises that come with taking over a business.

Why bring the Fund into your deal?

One equity check in most deals

In most deals, we can write the full equity check ourselves, so you aren’t chasing a dozen investors or assembling a complicated cap table just to get the deal funded.

Built for SBA-backed acquisitions

We focus exclusively on SBA-backed acquisitions, so the financing structure is familiar territory. We understand the lender process, the equity requirements, and the diligence standards that shape these deals.

We move at deal speed

When your deal is moving, our process moves with it. We keep the review tight, make decisions quickly, and avoid adding unnecessary delays to the transaction.

When we say we invest, we invest

When the Fund says yes, you can treat it like a real commitment. We move forward from there unless diligence uncovers a material change that alters the deal.

You run the business

Our capital doesn’t come with a backseat CEO. Because the deal is primarily financed by SBA and your personal guarantee, you’ll still run the company and make the operating decisions.

Our terms are always visible

Our standard deal documents are available before the first conversation.

Take the time to review them, and decide for yourself whether our capital fits the deal you are putting together.

Note that these terms may be adjusted given the specifics of the deal.

Review our term sheet.

We back the deal & the Operator behind it

For the Fund to invest, we need to know both the business and the individual running it.

The business

We look for durable, cash-flowing businesses that can support acquisition debt and continue performing after the ownership transition.

The Operator

The Operator has to be someone we want to back, and their experience has to make sense for the company they plan to run.

The fit between the two

We want to understand why an Operator is the right fit for the business they’ve chosen to buy.

Their background, experience, and operating strengths should line up with what the company will require after close.

Deals we’re looking for

The strongest opportunities for the Fund are businesses with proven cash flow, manageable risk, and financials that stand up to diligence.

Typically, these businesses:

Qualify for SBA financing
Generate durable cash flow
Have limited customer concentration
Maintain clean, reliable books
Carry sensible working capital needs
Hold up under a third-party QoE from an approved provider

Businesses we usually avoid

Some business models carry risks that do not fit how the Fund invests.

Currently, this includes:

Restaurants
Brick-and-mortar retail
Heavy-capex businesses
CPG
E-commerce businesses dependent on third-party platforms
Businesses with most revenue tied to new residential construction

Terms to keep everyone aligned

The Fund needs real protections for the capital it puts at risk, but those safeguards are there to protect us against bad actors, not to turn investors into Operators.

Our structure keeps day-to-day control with you while defining how the economics work for everyone involved.

Preferred equity

The Fund’s capital is structured as preferred equity.

That puts investor capital ahead of common equity for distributions while keeping operating control with the owner.

Preferred return

Preferred equity comes with a preferred return that compensates investors for the capital they put at risk.

You’ll decide whether to keep those payments current or let the returns accrue.

Once the Fund has received its invested capital and preferred return, our position converts to common equity alongside yours.

The step-up

The Fund also receives common ownership based on the size of its investment relative to the purchase price.

That percentage is multiplied by a standard step-up of 1.5x to 2.5x to determine the Fund’s common stake.

You keep the majority of common ownership

You remain the majority common owner after the Fund invests.

That means you’ll keep the largest share of the long-term economic upside while retaining day to day control of the business, including decisions around how capital is allocated.

Consent rights cover major decisions only

You don’t need investor approval to run the business.

The Fund only holds consent rights around major decisions to protect us against bad actors.

While day-to-day decisions will remain with you, choices that could materially impact our investment — such as taking on new debt, new equity, or initiating a sale — will require our input.

No forced exit timeline

The Fund is built to support long-term ownership and doesn’t have a fixed timeline forcing us to sell our stake or return capital to investors.

You can continue operating the business for as long as it makes sense without investors pressuring you toward an exit.

Every portfolio company get an Operate finance team

Businesses backed by the Fund use the Lab’s Operate service for post-close accounting and finance.

That gives the Fund trusted and reliable reporting and equips the Operator with a finance team that already understands acquisition debt, lender requirements, and the transition year.

Learn more about Operate. →

We start with PACT

Every deal with the Fund starts from PACT, a standard we helped create alongside other major investors in the ETA space.

Our goal was to give both Operators and investors a fair starting point, with core protections and mechanics already defined before deal-specific terms are added to the agreement.

Read the PACT documents. →

Know the process before you pitch

The process to connect with the Fund is built around the pace of an active acquisition.

We’ll ask for all the information up front, review the entire deal, and move through a defined set of conversations to reach an answer. You’ll stay in the loop every step of the way.

Step 1

Send everything up front

As part of your initial pitch, we’ll ask you to send all the important details for review.

That includes the business financials, tax returns, CIM, your PFS, why you like the deal, and how you plan to operate and grow the company.
Step 2

We review the full package

Our Fund team reviews the entire submission before anyone gets on a call.

If the deal doesn’t fit on paper, we’ll tell you why before you spend more time on the process. Some businesses are a bad fit for us, and ruling them out early saves time and frustration on both sides.
Step 3

Working call

Once the package clears review, you’ll talk through the deal with the Fund team.

We’ll use the call to go deeper on the business, vet your plan for operating it, and ask questions we need answered before the deal moves to the partners.
Step 4

Partner call

If the working call goes well, the Fund team will connect you with our partners.

You’ll walk them through the deal and answer any remaining questions. This is the final call before we make a decision.
Step 5

Get an answer

Our team will respond within 48 hours.

You’ll receive either a term sheet or a rejection with feedback on why we’ve chosen to pass.

If the answer is yes, we’ll ask for your decision within five business days.

We’re built for deals in motion

Our process is designed to give you clarity quickly, and we expect the same once we make a commitment.

A term sheet holds capital for your deal for five business days. After that deadline, we move on so we can keep deploying capital into acquisitions that are ready to proceed.

You don’t need a live deal to get Fund backing

Committed Capital gives qualifying Lab members a binding Fund commitment before an acquisition is under LOI.

Experienced members can search with real equity already in place, which solves the chicken-and-egg problem that comes with pursuing larger deals.

Explore Committed Capital

The Fund is always optional

Lab members are free to finance their acquisitions however they choose, and working with us is entirely optional.

The Fund can also back non-members who have qualifying live deals.

We make money when we invest in good businesses and those companies perform well, not by forcing capital into every member transaction.

Learn how the Lab makes money

Choose your people

There are plenty of investors willing to look at a good deal, but when you’re signing a personal guarantee and making one of the largest investments of your life, who that capital comes from matters.

We’ve bought businesses ourselves.

We know what ownership looks like after close, and we invest with the patience to let Operators run their businesses for as long as it makes sense.

If that’s the kind of partner you want beside you, bring your deal to the Fund.